Regulators on Thursday denied the life insurance industry's request to ease rules specifying how much cash they must set aside to absorb potential losses and pay claims.

The rejection came a day after shares of several top life insurers jumped more than 20 percent following an advisory vote by a panel of the National Association of Insurance Commissioners. The panel had supported variations of six of the nine industry proposals, and urged three others be rejected.

But the insurers' shares reversed course Thursday as the NAIC's executive committee turned down the request in a vote held via teleconference. The industry group American Council of Life Insurers wanted the commissioners to adopt a national set of rules to replace state-by-state regulations that the industry calls too strict.

"So far the insurance industry is in much better condition than most of the rest of the financial services sector because of strong state solvency regulations," the NAIC's president, New Hampshire Insurance Commissioner Roger Sevigny, said in a statement. "Simply put, the industry has not made a credible case for why we need to make changes on an emergency basis, and why those changes should be limited to the specific proposals made by the industry."

The ACLI submitted proposals discussed in an NAIC public hearing Tuesday, and opposed by some consumer groups.

After Thursday's rejection, the Washington-based ACLI issued a statement on behalf of President and Chief Executive Frank Keating saying the insurance commissioners' group had failed "to provide uniform guidance to the states on how to respond to rapidly changing and volatile economic conditions."

Committees of the NAIC, which represents insurance commissioners nationwide, will review pieces of the industry proposal further. But for now, current state laws give commissioners enough flexibility to provide life insurers relief from the rules on a case-by-case basis, the organization said.

Susan Voss, Iowa's insurance commissioner and the NAIC's vice president, said any further consideration of changes to regulatory requirements "will follow the NAIC's open, transparent, and deliberative process."

The industry pushed for the changes at a time when many other regulations are being tightened in response to problems plaguing the financial industry, including segments of the insurance industry.

The industry group says its members are holding far more than needed to absorb losses and make good on clients' claims. The ACLI says its proposed changes would free up $25 billion to $30 billion in capital, representing 6 percent to 7 percent of life insurers' total adjusted capital in 2007.

Life insurers maintain the capital requirements are so strict that they can make it appear to investors and potential customers that their finances are far less sound than they actually are.

On Wednesday, as financial stocks gained broadly on word of the government's financial rescue plans, life insurers posted the strongest gains. Shares of Hartford Financial Services Group Inc., MetLife Inc., Lincoln National Corp., Principal Financial Group Inc. and Prudential Financial Inc. all rose more than 20 percent.

The stocks fell sharply Thursday, as broader markets declined, and as the NAIC rejected the proposal in its afternoon vote. Shares of Hartford Financial Services fell $2.31, or 13 percent, to close at $15.40; MetLife fell $3.24, or about 9.7 percent, to $30.03; Lincoln National dropped $3.80, or about 18.4 percent, to $16.84; Principal Financial fell $2.64, or about 12.9 percent, to $17.84; and Prudential Financial fell $5.12, or about 15 percent, to $28.62. (AP)